Assignment:
Consider the following supply and demand schedule for steel:
|
Price per Ton ($)
|
20
|
40
|
60
|
80
|
100
|
120
|
140
|
160
|
180
|
|
Qd(million Tons)
|
200
|
180
|
160
|
140
|
120
|
100
|
80
|
60
|
40
|
|
Qs(million Tons)
|
20
|
60
|
100
|
140
|
180
|
220
|
260
|
300
|
340
|
|
|
Pollution from steel production is estimated to create an external cost of $60 per ton.
- Show the external cost, market equilibrium, and social optimum in a graph.
- What kinds of policies might help to achieve the social optimum? What would be the effects of these policies on the behavior of consumers and producers? What would be the effect on market equilibrium price and quantity?
Your answer must be, typed, double-spaced, Times New Roman font (size 12), one-inch margins on all sides, APA format and also include references.